Coal Divestment at UNC -

Transcription

1 Coal Divestment at UNC - Jeremy Godsell Sapna Patel Stella Radford Nikhil Umesh ENST 698

2 Executive Summary Problem: Examining the efficacy of dives3ng from stocks and funds held in coal in UNC- Chapel Hill s about $3 billion endowment, and crea3ng frameworks for corporate social governance. Highlights Concerns Recommenda3ons [insert screenshot of relevant slide] Outcomes UNC Management Company Divest from Coal- holding funds and stocks Tracking of investments being made in the endowment to ensure transparency Stakeholder input and formal stance from Trustees on corporate governance

3 What is Divestment? Refers to the sale or reduction of an asset via liquidation or exchange. Euphemistic for socially responsible investing Justifications: Financial Political Ethical Strategies may include: Disaggregation Shareholder Advocacy

4 History of Divestment at UNC Apartheid South Africa (1987) disinvestment led by Anti-Apartheid Support Group 1 Sudan Divestment Resolution (2008) resulted in all companies with ties to Sudan being added to Management Company s Prohibited List 2 Board of Trustees pass a non-binding resolution requiring Management Company to research investing in environmentally-friendly clean energy strategies (2014) Present

5 Precedent for Coal Divestment 20+ colleges & universities have divested in the U.S. 3 Stanford represents the largest purge from coal with a $21.4 billion endowment Months later, Stanford invested in three oil and gas companies, to the dismay of many faculty

6 Management of the UNC Endowment The majority of the UNC endowment is managed by the UNC Management Company, Inc., established in It is a professionally staffed company Four primary teams that make up the UNC Management Company The Management Company is governed by a Board of Directors including UNC Chapel Hill leadership

7 Allocation of the UNC Endowment The UNC Endowment is subdivided into eight categories similar to most mutual funds 5 6.5% of the endowment is invested in the Energy and Natural Resources sector This amounts to approximately 172 million dollars tied up in energy interests

8 Coal s Future in the Market Resource royalty taxes likely to increase in the future less financially attractive to investors 6 More expensive coal = more competition from renewables Policy changes: EPA proposal to limit tones of CO2/megawatt hour/ power Competition from natural gas severance tax decreased recently 7 Result: emerging trend of decreasing return on coal

9 Prospects for Natural Gas Investment Production and use of natural gas especially in the United States is quickly increasing Projections for coming years paint a positive picture overall for investment in natural gas commodities Natural gas causes 50% fewer emissions than coal, and is a bridging technology

10 Investment into Renewables Market drivers: Renewable portfolio standards implemented in 37 states (March 2013) 10 Federal incentives: Production Tax Credits 11 Global trends for investments in renewable energy 12 increasing steadily until 2011 Torrefied wood - alternative viable energy source and also a promising area for reinvestment

11 Recommendations 1. Divestment 2. Transparency 3. Stakeholder input

12 Executive Summary Problem: Examining the efficacy of divesfng from stocks and funds held in coal in UNC- Chapel Hill s about $3 billion endowment, and creafng frameworks for corporate social governance. Highlights Concerns Recommenda3ons [insert screenshot of relevant slide] Outcomes UNC Management Company Divest from Coal- holding funds and stocks Tracking of investments being made in the endowment to ensure transparency Stakeholder input and formal stance from Trustees on corporate governance

13 Thank You! Sapna Patel Nikhil Umesh Stella Radford Jeremy Godsell

14 References 1. "Anti-Apartheid Support Group of the University of North Carolina at Chapel Hill Records, " Collection Number: UNC Archives, n.d. Web. 20 Apr "The Case for UNC to Divest from Coal." Board of Trustees Presentation (n.d.): n. pag. Web. 20 Apr Wines, Michael. "Stanford to Purge $18 Billion Endowment of Coal Stock.The New York Times. The New York Times, 06 May Web. 20 Apr "About UNCMC." UNC Management Company Inc. N.p., n.d. Web. 20 Apr "Fiscal Year 2013 Annual Report." UNC Management Company (n.d.): n. pag Web. 6. Testa. B. M. Coal s Uncertain Future. Planning. Vol 80, Iss 8. Aug Kuykendal. T. W.Va. Eyes Natural Gas to Replace Declining Coal Revenues. The State Journal, vol 28, iss Nov Web. 20 Apr Glassman, James K. Betting on the Natural Gas Boom. Kiplinger s Personal Finance. June, Web. 20 April How To Invest In Natural Gas. CommodityHQ. Web. Accessed 20 April, Rabe, Barry. The Expanding Role of State Renewable Portfolio Standards. Pew Center on Global Climate Change. June Web. 20 Apr Bird, L.; Parsons, B.; et al. Policies and Market Factors Driving Wind Power Development in the United States. National Renewable Energy Laboratory. July Web. 20 Apr Global Trends in Renewable Energy Investment 2014: Key Findings. FS-UNEP Collaborating Centre for Climate & Sustainability Energy Finance. Web. 20 Apr